- CFA Exams
- CFA Level I Exam
- Topic 1. Quantitative Methods
- Learning Module 5. Portfolio Mathematics
- Subject 1. Portfolio Expected Value and Variance of Return
CFA Practice Question
Assume a portfolio with 35% stocks (S), 35% bonds (B), and 30% in a mutual fund (F). The expected return from stocks is 12%, the expected return on the mutual fund is 7%, and the expected return from bonds is 5%. What is the expected return on this portfolio?
B. 8.05%
C. 8.15%
A. 8.00%
B. 8.05%
C. 8.15%
Correct Answer: B
The expected return for the portfolio is calculated as follows: E(R) = 0.35 x 12 + 0.35 x 5 + 0.3 x 7 = 8.05%
User Contributed Comments 5
User | Comment |
---|---|
BayAreaPablo | Watch out for the E(Mutual Fund) = 7% and E(Bond)=5%. If you switch these (due to fast reading) you will get 8.15%. |
joe3 | should be careful during the test. I got the 8.15% :-( |
surob | Luckily, I got it right. Good one for the practice |
AUAU | Watch out. CFA exam may like this. |
hemraj007 | lol i got this 8.15% |